THE GATT / WTO AND DEVELOPMENTS IN INTERNATIONAL TRADE

Historically international relations in respect of the GATT have continually been fraught with confusion and indecision and there have been severe tensions between developing countries and the developed world. For instance, the GATT Council of Representatives agreed to initiate a Group on Environmental Measures and International Trade (EMT) as early as 1971 yet it was not actually convened until 1991.

If we look at the aims of GATT, two of the most fundamentals elements within the GATT are the 'National Treatment Clause' and the 'Most-Favoured-Nations (MFN) Clause'. The MFN Clause found in Article I of the GATT instructs all countries party to the GATT to provide equivalent treatment to like imported products in relation to domestically produced products.1 The National Treatment principle condemns discrimination between foreign and national goods or services and service suppliers.2 What thus becomes apparent is the inherent difficulty within the GATT multilateral trading system as to the differentiation between measures taken to ostensibly protect the environment and those that are tantamount to protectionist instruments and therefore in breach of the original aims of the GATT. Whilst it is clear that restrictions on the trade in endangered species clearly warrants recognition,3 what about the prohibition of imports of tuna which have been caught with methods that result in excessive incidental killing of ocean mammals such as dolphins?

Ostensibly, one can empathise with such a prohibition and view it as being reasonable yet the GATT Dispute Settlement Mechanism in the Tuna Dolphin case ruled in 1991 that such a prohibition was inconsistent with the GATT provisions.

The defence of the United States against Mexico rested on Article XX of the GATT which states inter alia:

"Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Contracting Party of measures:

(b) necessary to protect human, animal or plant life or health;

(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption."

Nevertheless, the US defence was rejected under both heads and it was ruled that (i) the prohibition related to the process of production and not the sale of a product (tuna); and (ii) that the exceptions contained in Article XX did not have extra-jurisdictional effect. The Panel's technical and narrow construction of Article XX was highly influenced by their concerns that to find otherwise would allow trade between parties who had identical internal regulations only, which amounted to an indirect imposition of one State's value judgment of (environmental) ideals on another.

  1. "…any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties."[^ Return]
  2. Under GATT Article III, imported goods, once duties have been paid, must be given the same treatment as like domestic products in relation to any charges, taxes, or administrative or other regulations.[^ Return]
  3. See the 1973 Convention on Trade in Endangered Species.[^ Return]

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